Musk says need to cut 10% of Tesla jobs

SAN FRANCISCO: Tesla chief executive Elon Musk has a “super bad feeling” about the economy and needs to cut about 10% of jobs at the electric carmaker, he said in an email to executives seen by Reuters.

The message, sent on Thursday and titled “pause all hiring worldwide”, came two days after the billionaire told staff to return to the workplace or leave, and adds to a growing chorus of warnings from business leaders about the risks of recession.

Almost 100,000 people were employed at Tesla and its subsidiaries at the end of 2021, its annual SEC filing showed.

The company was not immediately available for comment.

Tesla shares fell nearly 5% in US pre-market trade on Friday and its Frankfurt-listed stock was down 3.6% after the Reuters report. US Nasdaq futures turned negative and were trading 1% lower.

Musk has warned in recent weeks about the risks of recession, but his email ordering a hiring freeze and staff cuts was the most direct and high-profile message of its kind from the head of an automaker.

So far, demand for Tesla cars and other electric vehicles (EV) has remained strong and many traditional indicators of a downturn—including increasing dealer inventories and incentives in the US—have not materialized. But Tesla has struggled to restart production at its Shanghai factory after Covid-19 lockdowns forced costly outages.

“It is always better to introduce austerity measures in good times than in bad times. I see the statements as a forewarning and a precautionary measure,” said Hanover-based NordLB analyst Frank Schwope. Many carmakers achieved record profits in 2021, but the economic situation is now more uncertain, he noted.

Musk’s gloomy outlook echoes recent comments from executives including JPMorgan Chase & Co. CEO Jamie Dimon and Goldman Sachs President John Waldron.

A “hurricane is right out there down the road coming our way,” Dimon said this week.